Two major banks in the Middle East are merging to create a banking behemoth in the region with assets worth $175 billion. The board of directors of National Bank of Abu Dhabi and First Gulf Bank have recommended the merger via a share-swap transaction. T his is expected to close in the first quarter of 2017. Post-merger, the entity will have a market value of about $29 billion, larger than some of the global banks. With a bigger balance sheet and a network that extends to 19 countries, the merged entity could give Abu Dhabi more financial muscle and an international presence to support the emirate’s growth plans at home and overseas. NBAD and FGB in the past few years have been trying to expand their emerging markets presence as domestic growth has run out of steam. FGB, for example, has a branch in Singapore and representative offices in Hong Kong and Seoul. National Bank of Abu Dhabi is active in the Far East as well, but also in Sao Paulo, Shanghai, Geneva and Washington. Banking analysts feel the merger will pave the way for more consolidation in the UAE banking sector where almost 50 local and international banks compete. Under the terms of the deal, billed as a merger of equals, FGB shareholders would receive 1.254 NBAD shares for each FGB share they hold, implying a discount for FGB shareholders of 3.9%. FGB’s shares would be delisted after the transaction is completed. Once shareholders and regulators approve the merger, the Abu Dhabi government and related entities would hold a 37% stake in the new entity, which would retain the name of National Bank of Abu Dhabi. Abdulhamid Saeed, FGB’s current managing director, has been named to become the new bank’s chief executive officer. NBAD’s current chief, former Standard Chartered executive Alex Thursby, will continue to be at the bank’s helm until the merger is completed.
